AOL Bets on Hyperlocal News, Finding Progress Where Many Have Failed

SAN FRANCISCO — City council meetings, high school football games and store openings may seem like small town news, but they are critical to AOL’s revival effort.

Over the last year and a half, AOL, the former Internet colossus, has spent tens of millions of dollars to build local news sites across the country through Patch.com. The idea is that the service would fill the gap in coverage left by local newspapers, many of which are operating on a string after declines in advertising revenue.

Patch has already set up shop in nearly 800 towns. By the end of this year, it expects that to be in 1,000 — each one with an editor and a team of freelance writers.

Traffic on individual sites is low; former editors say that the average post attracts just 100 views and that they considered 500 page views a wild success. But the overall traffic is growing quickly.

Yet over the years, a number of so-called hyperlocal news sites have failed, and the idea is largely unproved financially.

For example, Backfence, a hyperlocal forerunner that invited readers to contribute articles, closed after it was unable to attract enough users and advertising.

AOL declined to discuss the financial performance of Patch other than to say that it was in investment mode.

At the same time, Patch faces competition from Yahoo, Google and local news companies, all vying for a piece of local online advertising — gift shops, plumbers, regional hospitals, car dealers — which is expected to reach $15.9 billion this year, according to Borrell Associates, a market research firm.

“The local space is hard, there are a lot of dead soldiers,” said Tim Armstrong, AOL’s chief executive. “But I think we’re happy where we are.”

Mr. Armstrong, a former top ad executive at Google, helped found Patch in 2007, during a small boom in hyperlocal news start-ups, including EveryBlock and Outside — all trying to create a digital version of local newspapers.

An initial investor in Patch, Mr. Armstrong, who is 40 and lives in Connecticut, has plowed $4.5 million into the site. A few months after becoming AOL’s chief executive in 2009, he led AOL’s $7 million acquisition of the nascent service.

Photo

Chandra Johnson-Greene, left, edits the Stamford, Conn., outpost.Credit
Judith Pszenica for The New York Times

A failed effort to find online information about volunteer opportunities for his family in their hometown gave Mr. Armstrong the idea for Patch. He began researching local news and at one point called his local paper to encourage it to create a Patch-like site.

“I just wanted something in my town,” he said. “I actually gave the idea to the local newspaper and they didn’t want it.”

Patch’s expansion has not come cheap to AOL. Last year alone, the company said, it spent up to $50 million.

Mr. Armstrong’s efforts with Patch are part of a broader push to reinvent AOL after a decade of steady decline. Mr. Armstrong is also investing in creating other editorial content; for example, since he took over, the company has bought TechCrunch, the technology blog.

Patch’s news coverage varies in its depth. The sites for some towns are full of articles, while others are largely filled with inconsequential briefs.

Retaining the thousands of readers needed to make an individual site profitable may be difficult because of the mixed quality, said Ken Doctor, a news industry analyst with Outsell and author of the book “Newsonomics.”

“They have a lot of work to do to fulfill their promise,” he said.

And competitors are a threat.

“Patch is going after the same prize as local newspapers, but so is Google and Yahoo,” Mr. Doctor said. “Everyone is going after those local digital marketing dollars.”

An error has occurred. Please try again later.

You are already subscribed to this email.

Yahoo, for instance, is testing a sort of community hub that pools news articles about individual towns in one place. Google’s local effort does not revolve around news, but rather business listings and user recommendations.

Patch’s competitors also include Examiner.com, a news company of local sites that is controlled by the investor Philip F. Anschutz, as well as neighborhood news blogs.

News executives are closely watching Patch, said Al Cupo, vice president for operations at the Suburban Newspapers of America, an industry group whose members publish 2,000 newspapers.

The fear, still unrealized, is that Patch will lure away readers and advertisers.

“Of course there is concern,” said Mr. Cupo, whose organization plans to discuss the potential impact of Patch at a coming conference. “We need to understand this sooner rather than later.”

Patch has hired hundreds of journalists, each equipped with a laptop computer, digital camera, cellphone and police scanner.

Photo

AOL’s Patch.com is in nearly 800 towns. Warren Webster, left, president of Patch Media; Tim Armstrong, chief of AOL; and Jon Brod, president of AOL Ventures.Credit
Judith Pszenica for The New York Times

The journalists, which AOL calls local editors, generally earn $38,000 to $45,000 annually, and work from home. They are expected to publish up to five items daily — short articles, slide shows or video — in addition to overseeing freelance writers.

Current and former Patch journalists say the operation is like a start-up in that experimentation is encouraged. But the bare-bones staffing — one full-time journalist for each community — can also mean working seven days a week and publishing articles that lack depth simply to meet a quota, they said.

Journalistic high points include a 2009 report about hazing of high school freshmen in Millburn, N.J., that was picked up by national television and newspapers, and scoops last year that were later cited by The Baltimore Sun. One was about a hit-and-run accident that killed a 14-year-old boy and another concerned a Baltimore County Council candidate who had failed to pay his taxes for years.

But several plagiarism cases have tarnished Patch during its brief history. One journalist posted a photo from a rival site, and then denied it, while two freelancers published articles that were at least partly copied from other sources.

A person familiar with the matter, who could not speak on the record about personnel matters, said they were all fired.

Warren Webster, Patch’s president, likes to extol Patch’s journalistic credentials by pointing out that his staff includes journalists from major dailies like The Los Angeles Times and seven Pulitzer Prize winners.

Many top editors are indeed experienced, but those who do most of the writing tend to be less seasoned.

For now, Patch’s focus is on relatively affluent towns that are more attractive to advertisers. Only a few urban neighborhoods have a Patch site, and some of those are run by college students.

Posts about the police, schools and local sports generate the most traffic, Mr. Webster said, with events like the recent elections and the New York blizzard sharply lifting page views.

“We’re getting a lot of feedback about Patch being the only source of coverage about local road closings and power outages,” Mr. Webster said.

But Bill Lynch, editor in chief and publisher of The Sonoma Index-Tribune, a biweekly with a circulation of 8,000 in Sonoma, Calif., doubts that Patch will succeed in his town, despite its big spending.

Most residents have never heard of Patch, he said, and its limited staffing means that it will have trouble competing against newspapers with more reporters.

“If you ask nine out of 10 Sonomans what Patch is, they’ll just look at you and say, ‘Huh?’ ” Mr. Lynch said.

Correction: January 20, 2011

An article on Monday about Patch, AOL’s hyper-local news service, referred incorrectly to a political candidate who was the subject of a news scoop by Patch that was later cited by The Baltimore Sun. The candidate, who Patch said had failed to pay his taxes, was running for Baltimore County Council, not Baltimore City Council.

A version of this article appears in print on January 17, 2011, on Page B3 of the New York edition with the headline: AOL Bets on Hyperlocal News, Finding Progress Where Many Have Failed. Order Reprints|Today's Paper|Subscribe